Making an Offer

Is a
low offer a good idea?While your low offer in a normal market might be
rejected immediately, in a buyer's market a motivated seller will either accept
or make a counteroffer. Full-price offers or above are more likely to be
accepted by the seller. But there are other considerations involved:

Is
the offer contingent upon anything, such as the sale of the buyer's current
house? If so, a low offer, even at full price, may not be as attractive as an
offer without that condition.

Is the offer made on the house as is, or does
the buyer want the seller to make some repairs or lower the price instead?

Is the offer all cash, meaning the buyer has waived the financing contingency?
If so, then an offer at less than the asking price may be more attractive to the
seller than a full-price offer with a financing contingency.

Can you buy homes below market?While a typical buyer may look at
five to 10 homes before making an offer, an investor who makes bargain buys
usually goes through many more. Most experts agree it takes a lot of
determination to find a real "bargain." There are a number of ways to buy a
bargain property:

Buy a fixer-upper in a transitional neighborhood, improve
it and keep it or resell at a higher price.

Buy a foreclosure property
(after doing your research carefully).

Buy a house due to be torn down and
move it to a new lot.

Buy a partial interest in a piece of real estate,
such as part of a tenants- in-common partnership.

Buy a leftover house in
a new-home development.

Are low-ball offers
advisable?A low-ball offer is a term used to describe an offer on a
house that is substantially less than the asking price. While any offer can be
presented, a low-ball offer can sour a prospective sale and discourage the
seller from negotiating at all. Unless the house is overpriced, the offer
will probably be rejected. You should always do your homework about comparable
prices in the neighborhood before making any offer. It also pays to know
something about the seller's motivation. A lower price with a speedy escrow, for
example, may motivate a seller who must move, has another house under contract
or must sell quickly for other reasons.

What is the difference between
list price, sales price and appraised value?The list price is a seller's
advertised price, a figure that usually is only a rough estimate of what the
seller wants to get. Sellers can price high, low or close to what they hope to
get. To judge whether the list price is a fair one, be sure to consult
comparable sales prices in the area. The sales price is the amount of money you
as a buyer would pay for a property. The appraisal value is a certified
appraiser's estimate of the worth of a property, and is based on comparable
sales, the condition of the property and numerous other factors.

What
contingencies should be put in an offer?Most offers include two standard
contingencies: a financing contingency, which makes the sale dependent on the
buyers' ability to obtain a loan commitment from a lender, and an inspection
contingency, which allows buyers to have professionals inspect the property to
their satisfaction. A buyer could forfeit his or her deposit under certain
circumstances, such as backing out of the deal for a reason not stipulated in
the contract. The purchase contract must include the seller's responsibilities,
such things as passing clear title, maintaining the property in its present
condition until closing and making any agreed-upon repairs to the
property.

Who gets the furnishings when a home is sold?It
depends. Fixtures, any kind of personal property that is permanently attached to
a house (such as drapery rods, built-in bookcases, tacked-down carpeting or a
furnace) automatically stay with the house unless specified otherwise in the
sales contract. But anything that is not nailed down is negotiable. This most
often involves appliances that are not built in (washer, dryer, refrigerator,
for example), although some sellers will be interested in negotiating for other
items, such as a piano.

Whose obligation is it to disclose pertinent information about a
property?In most states, it is the seller, but obligations to disclose
information about a property vary. Under the strictest laws, you and your agent,
if you have one, are required to disclose all facts materially affecting the
value or desirability of the property which are known or accessible only to you.
This might include: homeowners association dues; whether or not work done on the
house meets local building codes and permits requirements; the presence of any
neighborhood nuisances or noises which a prospective buyer might not notice,
such as a dog that barks every night or poor TV reception; any death within
three years on the property; and any restrictions on the use of the property,
such as zoning ordinances or association rules. It is wise to check your state's
disclosure rules prior to a home purchase.

How do you determine the
value of a troubled property?Buyers considering a foreclosure property
should obtain as much information as possible from the lender, including the
range of bids expected. It also is important to examine the property. If you are
unable to get into a foreclosure property, check with surrounding neighbors
about the property's condition. It also is possible to do your own cost
comparison through researching comparable properties recorded at local county
recorder's and assessor's offices, or through Internet sites specializing in
property records.

What are some tips on negotiation?The more
you know about a seller's motivation, the stronger a negotiating position you
are in. For example, seller who must move quickly due to a job transfer may be
amenable to a lower price with a speedy escrow. Other so-called "motivated
sellers" include people going through a divorce or who have already purchased
another home. Remember, that the listing price is what the seller would like
to receive but is not necessarily what they will settle for. Before making an
offer, check the recent sales prices of comparable homes in the neighborhood to
see how the seller's asking price stacks up. Some experts discourage making
deliberate low-ball offers. While such an offer can be presented, it can also
sour the sale and discourage the seller from negotiating at all.

Do I
need an attorney when I buy a house?In some states, you do need an
attorney to complete a real estate transaction, but in others you do not. Most
home buyers are capable of handling routine real estate purchase contracts as
long as they make certain they read the fine print and understand all the terms
of the contract. In particular, you should be clear on the terms of any
contingency clauses that will allow them to back out of the contract. If you
have any questions at all, it may be advisable to consult an attorney to avoid
future legal hassles. In looking for an attorney, ask friends for
recommendations or ask your real estate agent to recommend several. Call to
inquire about fees and to check on their experience. In general, more
experienced attorneys will cost more, but real estate fees as a rule are small
relative to the cost of the property you are buying.